Cutting assisted living monthly cost strategies
Trying to determine tbill strategy for 95 yr old mother, who just sold her house, in assisted living. She loves listening to your show, even though she is now in PA, and still actively invests. I thought the choice of a 4 week tbill for house proceeds would take the sting out of the monthly cost of assisted living. Trying to see what the 4 week tbill would pay per month vs a 13 week tbill ON A MONTHLY BASIS. I think the formula for the 4 week is principal x rate/12. So on 10000 at 3.69% we’d see a 4 week payout of $30.75. If a 13 week tbill the rate 3.77% what would I make per 4 weeks on the same $10000? I’m thinking $31.41. The advantage of 4 week is the additional liquidity. What type of investment would you go with: 4 week or 1 year? Do you know of a better investment vehicle than tbills? Thanks Terry
Terry Says
Whew. OK, first, did you deal with the taxes on the sale of her house? You know she can exclude $250,000 of gains (and that’s above not only the original cost but any documented improvements she made over the years). If the gain is larger, you need to set some of that money aside for taxes!!!
Second, you are splitting hairs and creating a nightmare of T-bill investments, rollovers and withdrawals, when you should be more concerned about your mother and her life. I would suggest you take the money and put it in a money market deposit account in your bank, where it should earn at least 3.5%. Then you can write a monthly check to pay for her care.
If your bank is paying very low rates, go to either Vanguard or Fidelity and open a money market deposit account in their Government Securities Money Market Fund. You could also write checks from that fund.
Also, while I’m on the subject, I hope your mother has a revocable living trust, and you title the money market account in the name of the trust, with you as successor trustee. Or at least put it in a joint account with your name, and hope it doesn’t cause issues with your siblings.
